From Tuesday, the wealthy city-state will apply a new top marginal rate of 4 percent stamp duty on the portion of residential property value in excess of S$1 million ($761,615), Finance Minister Heng Swee Keat said in his budget speech. The current rate ranges between 1 and 3 percent.

Heng said the move was a progressive tax and came against the backdrop of suggestions to tax the rich more.

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Analysts said the stamp duty hike was marginal for individual home buyers, but may end up prompting developers to become more cautious on “en bloc” or collective deals, where they buy entire apartment blocks and re-build them with more units.

“For example, some of the big sites that have a S$1 billion price tag, the increase will be very significant,” said Christine Li, director of research at Cushman & Wakefield in Singapore. “The developers will have to fork out 1 percent, which means the (asking) prices will have to probably come down, so that will help to dampen the en bloc market.”

Singapore’s central bank warned in November about “excessive exuberance” in the city-state’s property market, urging developers to take into account upcoming supply when bidding for land.

Data from property services firm Colliers showed that a total of 27 residential collective sales with a combined value of S$8.13 billion ($6.2 billion) were transacted in 2017 - the best showing since 2007 when S$11.6 billion ($8.83 billion) were transacted.

Just last week, Singapore’s biggest property developer Capitaland Ltd said it would buy a centrally located apartment block for S$728 million to redevelop.

The spate of en bloc residential sales have come as Singapore’s private home market stabilised in 2017, recording its first annual price rise in four years, at 1.1 percent.

Analysts said the stamp duty hike meant developers would have to factor in an additional cost in their redevelopment purchases.

“With this, it will mean that there will be an additional layer of conservativeness,” said Derek Tan, an equity analyst at DBS. ($1 = 1.3130 Singapore dollars) (Reporting by Aradhana Aravindan; Editing by Raju Gopalakrishnan)